Vendor Authority an NCUA Blind Spot: Matz

NCUA Chairman Debbie Matz pitched the need for the NCUA to gain authority over credit union vendors Thursday when she introduced an interagency rule during the regulator's monthly board meeting.

The proposed rule would implement minimum requirements for state oversight of appraisal management companies.

“We face a regulatory blind spot. NCUA can approve this interagency rule, which would strengthen regulation of appraisal management companies and should help prevent conflicts of interest, but we are unable to enforce it,” Matz said.

“NCUA remains the only financial services regulator lacking the necessary authority to examine vendors for safety and soundness and compliance with laws and regulations. NCUA will continue to call on Congress to provide this authority,” she added.

According to the NCUA’s Strategic Plan 2014 – 2017, gaining the authority to regulate, examine, and take enforcement actions against vendors and CUSOs is a top priority for the agency. The strategic plan said acquiring the new authority would put NCUA on the same footing as many other federal financial regulatory agencies.

“The NCUA does not have the legal authority to examine third-party vendors, and we continue to question its push in this area. Credit unions already perform extensive third-party due diligence, which is already a focus of NCUA examinations and is conducted in accordance with NCUA guidance," said Michael Coleman, NAFCU director of regulatory affairs.

The proposed interagency rule, part of the Dodd Frank Wall Street Reform and Consumer Protection Act, “would apply to states that elect to establish an appraiser certification and licensing agency with the authority to register and supervise AMCs,” according to the board action memo presented at the meeting on Thursday.

The other federal regulators proposing the rule with the NCUA include the Federal Reserve, CFPB, Treasury Department, FDIC, Federal Housing Finance Agency and Office of the Comptroller of the Currency.